Brian Cowen (Laois-Offaly, Fianna Fail)

Tax relief for pension contributions is not unlimited. Relief on contributions to personal pensions and PRSAs is limited to a certain percentage of remuneration which rises with age, 15% to 30% for age 50 years and above. The employer contribution to PRSAs is aggregated with the employee contribution for the purposes of tax relief limits.

With regard to occupational pensions, where relief for employee contributions, including additional voluntary contributions, AVCs, is limited to an age related scale of 15% to 30% of earnings, there is no monetary or percentage limit in respect of relief given for employer contributions. The limitation on the employer contribution is by reference to actuarial guidelines in meeting funding requirements for the maximum pension of two thirds of final salary. This means that, unlike personal pensions where the control is on the relief given, the control here lies in the limitation of benefits paid. Furthermore, relief for employee contributions and contributions to personal pensions is capped at an earnings figure of €254,000.

Pension coverage is an issue that must be kept under review. The policy response must meet the challenge that confronts us. The CSO survey on pension coverage reveals that the coverage rate for persons in employment in the first quarter of 2004 was 52.4%. It has indicated it will complete its full survey of pension coverage towards the end of this year and it expects it to be published in the first half of 2006. The Pensions Board is also doing some work on this which might well be available in the middle of this year.

With regard to SSIA account holders, legislation on PRSAs was introduced in 2002. It would be desirable to monitor the up-take of these accounts before considering the need for incentives such as eliminating exit tax for SSIA funds which are eventually transferred to PRSAs.

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